Technology is evolving at an unbelievable rate. It was just 20 years ago when large computer screens, slow internet speeds and flip-phones were all the norm. Today, the world is more interconnected than ever. Computer processing speeds double roughly every 18 months and automation and AI are changing the way we work.
It is not only businesses that are affected. Consumers today expect the best services and products. Failure to provide to their wants will result in heavy losses, especially when there are plenty of replacement products available. This creates challenges for SMEs who do not typically have the resources or required scale to keep up with this ever changing business environment.
As such, it should not come as a surprise that failure to innovate and meet customer needs is the top risk faced by SMEs in Singapore, according to insurance broker, Aon. In fact, many of the stated top 10 risks such as “increased competition” and “economic slowdown” indicate that SME owners mostly worry about the business environment in which they operate. The only way to survive is to adapt and provide value-added propositions and capabilities.
In Singapore, SMEs account for approximately two-thirds of all employment in the country, contributing nearly S$200bn to the economy. It goes without saying that SMEs plays a hugely important role to Singapore’s economy. It also serves as a testament to Singaporean SMEs’ ability to innovate and adapt to the changing business landscape; albeit with increasing difficulty due to the sheer speed of technological advancement.
Managing Director of Aon Inpoint Asia, Andrew Hare, suggests that there are three key areas that can be resolved fairly easily:
“Firstly, insurance plays a critical role in providing peace of mind and empowering SMEs to focus on the key priorities of growth and innovation. The impact of a financial loss can be devastating to an SME – so ensuring the optimal coverages are in place to protect against exposures such as Property Damage and Employers Liability is critical. Secondly, workforce shortage ranked as a top risk. A structured talent management plan can help to mitigate against this. Finally, cashflow and liquidity risk ranked as a top 5 risk can also be mitigated. Solutions including Trade Credit insurance, Surety, and Bonds ensure SMEs have sufficient balance sheet and cash flow protection”.
SMEs are often able to operate with greater agility and flexibility than larger firms, which offers them a significant advantage. Like trying to steer a sluggish cargo ship, implementation of policy and regulatory change can often take significant time and investment in large corporations thanks to complex organisational structures.
On the other hand, SMEs are like manoeuvrable speedboats; able to adapt and change course quickly and often adopting a “test and learn” approach to developing new products. As a result, we regularly see SMEs who are both flexible and strategic, growing by leaps and bounds.
SMEs are also more often than not, easier to sympathise with from a consumer point of view. Large companies are often industry leaders, thus having the most publicity and most visuals. This means that they are also the first in line to receive backlash or criticism. SMEs tend to be given more leeway, especially if they are able to cater to the tastes and preferences of the younger, digital generation.